Wednesday, March 20, 2013

Pence Skeptical On $100 Million Tax Giveaway To IMS

Gov. Mike Pence is thinking out loud, at least, like a true fiscal conservative in questioning a legislative plan to give up to $100 million in state tax dollars to the privately-owned Indianapolis Motor Speedway to make improvements to the track and related facilities. State Sen. Mike Young sprung the legislation in the Senate near the end of action for bills in the first house, leaving virtually no opportunity for public debate, before the Senate rammed the legislation through on a bipartisan, 37-12 vote. The IMS doled out more than $100,000 in campaign contributions in the lead-up to the introduction of the unprecedented public subsidy as the IMS moved to add "rent-a-civic" leaders like Mark Miles to its management team. WTHR has more on Pence's comments:
The state's top political leader is voicing concerns about a plan to offer financial help to the Indianapolis Motor Speedway.
Governor Mike Pence told reporters Wednesday that he has reservations about the way IMS bill is crafted. Pence is concerned that it provides little private investment opportunity.
The state Senate approved the $100 million plan in a 37-12 vote last month. The Speedway already spends $5 to $15 million annually on maintenance and is facing competitive pressure from newer facilities.
Hulman & Co. CEO Mark Miles and IMS President and CEO Jeff Belskus went to the Statehouse to ask for financial help in February.
With $100 million in bonds, the Speedway will add lights to allow night racing at the historic track. It will also renovate the stands, upgrade facilities and install high-tech video boards.
Lighting the track, as well as grandstands and parking lots, could cost as much as $20 million. Building renovations and track upgrades could cost as much as $30 million. Another $10 million would be spent to make the Speedway compliant with the Americans with Disabilities Act.
The money would be essentially taken out as a lump sum loan and paid back over 20 years. A special taxing zone at IMS would provide $5 million a year. Another $2 million annually would be paid by the Speedway . . .
Let's be clear. There is nothing in the legislation that requires the IMS to contribute $2 million annually; any contribution the IMS makes to these improvements are at its discretion. The only recourse bondholders have for repayment of the bonds issued under the legislation is to capture up to $5 million a year in taxes the IMS pays to the state. If the state revenue contribution is inadequate to cover repayment of the bonds, the bondholders have no recourse against the IMS because the proposed state law bars them from protecting their interest with any lien or mortgage on the IMS.

During a House Ways & Means Committee hearing this morning on the give-away, the IMS' Mark Miles told lawmakers the Hulman-George family has no plans to sell the IMS. “There is absolutely no intention to sell it,” he said. “We're not doing things to get it ready to sell. The family fully expects to keep this business their business.” Yeah, as if he's going to admit their true intentions out loud to lawmakers. I wonder if Miles carefully parsed those words so that a new owner that included Tony George as a successor owner would make his statement true.

IMS officials are once again touting an economic development study it had prepared, which claims the IMS contributed $510 million to the local economy annually and generates 6,200 jobs. The IMS and IndyCar series actually have a relatively small number of full-time employees. As everyone familiar with IMS events knows, the IMS relies heavily on volunteers from not-for-profit groups to provide concession and parking staff on race day. Nonetheless, it claims the IMS and related sports businesses generate annual compensation to employees of over $235 million. It claims 200,000 out-of-state visitors spend $145 million combined at the IMS' three annual race events.


charlielucky said...

I'm not sure what is worse: Your misspelling of "skeptical" in your post's title or the sensationalism you flavor it with by using the term, "giveaway".

Fisrt, it isn't a "giveaway," it is a loan as you very clearly state in the body of your article. It is also a rather safe loan, given the amount of revenue the IMS generates annually. Second, this is a very rare request from IMS as they are generally self-sufficient being privately owned and all.

While I don't want to assume too much about you, it would appear that you have spent very little time at the track and likely have not been to a race there, specifically the 500. Had you experienced that, you would understand why $100 million over 20 years is a very little amount of money compared to the income that the track will likely generate over that time frame. That is only the dollars and cents, though, and says nothing about the prestige of the race and the draw that brings racing fans back year after year for over a hundred years. It is what sets Indy apart from other cities. Lots of cities have football teams, basketball teams, etc. Only one city, however, has the greatest race course in all the world. We should do whatever we can to make sure that the track does not fall into disrepair as it did before the Hulman family rescued it. This loan would be a great start.

Gary R. Welsh said...

Hey, unluckycharlie, I've purchased tickets to every 500 since 1992, and I've attended the Brickyard and Formula races there as well. It isn't a loan that will be repaid by the IMS. There is up to $100 million in state tax dollars that will be diverted and will not be available to fund necessary and proper state expenditures. If they want this money, they can open up their books. What do you want to bet that the IMS declares a loss on its state tax returns? The DOR will do the same thing that is happening with the downtown sports district. They will simply say without any substantiation that $5 million is generated. It does this every year when it claims the downtown sports district generates $11 million in state tax revenues and gives it to the CIB when they know damn good and well that amount of revenues were never generated in the first place. I'm getting sick and tired of giving welfare to the state's wealthiest citizens, whether it's the Hulman-Georges, the Simons or the Irsays, while the state and local governments screw over ordinary people who labor to keep their head above water every which way they can. That is not the American way, and we're sick and tired of being taxed into servitude and paying tributes to a royal elite class of people who think they don't have to abide by the same laws that apply to the rest of us and sure as hell can get along just fine without a dime of our public dollars.

Flogger said...

If the IMS needs a loan there is a place that provides loans. It is called a Bank. The Government should not be providing loans to anyone!!!! The Government should not set up a taxing body like the CIB, to confiscate tax dollars to Build Stadiums for Billionaires!!!!

Paul K. Ogden said...


The State would be backing a loan that will be paid for by revenue that we are now allowing IMS to capture when IMS previously did not. It's quite the spin to suggest the IMS is paying back the loan.

It's nothing more than corporate welfare, money being taken from hard working men and women and handed over to the Hulman-George family.

Pete Boggs said...

Lucky doesn't know his ax from a hole in the stump. Government's Constitutional charter isn't business- it's limited, to government.